SACRAMENTO, CA – January 16, 2014 – Today, theSacramento Kings announced they will become the first major professional sports franchise to accept Bitcoin, a popular online currency. The bitcoin purchases will be processed through BitPay – the world’s largest payment processor for virtual currencies.

Since purchasing the Kings earlier this year, majority team owner Vivek Ranadivé has directed a business philosophy coined "NBA 3.0," which focuses on investments in technology, globalization and deep community partnerships. The BitPay relationship marks another manifestation of the 3.0 philosophy in Sacramento.

Tapping into a new and innovative digital currency community in which bitcoins can be earned and saved by users across the globe, the Kings have begun to accept bitcoins in the Kings Team Store through a simple checkout process, and will offer fans the ability to pay online for team merchandise and tickets by March 1. With this technology provided by BitPay, Kings fans will be able to purchase Kings merchandise and experiences in a faster and more secure way using bitcoin.

“We are maniacally focused on creating the most seamless experience for our fans in all facets,” said Ranadivé. “With BitPay, we are able to implement a technology that allows our fans to make Kings-related purchases without physically reaching into their wallets. A major tenet of the NBA 3.0 philosophy is about utilizing technology for the betterment of the fan experience, and this is yet another step in that process.”

BitPay’s Bitcoin Payment Gateway API is the most advanced and most reliable bitcoin-processing platform, both key reasons the Kings chose to partner with BitPay.

“We make it easy for businesses like the Sacramento Kings to accept bitcoin as a form of payment both in-person and online,” said Tony Gallippi, co-founder and CEO of BitPay. “As the first professional sports team to accept bitcoin, the Sacramento Kings continue to show that they are at the intersection of sports and technology.”

ATLANTA -- December 11, 2013 --BitPay Inc, the world leader in business solutions for virtual currencies, announces it has processed over $100 million in transactions this year, and has increased its merchant base to over 15,500 approved merchants in 200 countries. Since the announcement of the new All Inclusive Pricing Plan in October, along with the integration with Shopify in November, the number of new merchants has increased over 50% and the transaction volume has tripled.

"This year, the 2013 holiday season was Adafruit's biggest ever. We are delighted to offer bitcoin payments via BitPay to our community and customers. It was fast and easy, hundreds of orders and happy customers getting educational electronics, using bitcoin!" shared Limor Fried, Founder and Engineer with Adafruit.

Bitcoin has "clear potential for growth and could become a major means of payment for online transactions” a Bank of America analyst told CNBC. As the number of Bitcoin users continues to increase, merchants such as Adafruit, BTCTrip, Alliance Virtual Offices, and Clearly Canadian, see the value of working with BitPay to help expand their business.

"BitPay is the gateway payment for business that want to accept bitcoin. It's the main player to develop the merchant economy for bitcoin community,” said Martin Fernandez, CEO BTCTrip.

BitPay has made the process of becoming a merchant simple, hassle free and accessible everywhere. Merchants choose the way they want to accept Bitcoin; either via mobile device in-store, NFC into a POS terminal, online through any of BitPay’s shopping cart partners, or through direct API. Merchants can also choose how they want their funds settled from one of the 40 local currencies BitPay offers including Bitcoin.

Many of BitPay’s new merchants are “trying to stay ahead of the curve, while expanding our customer base,” says Anthony Gallippi, Owner of Smoke Bourbon BBQ House in Toronto, Canada.

The recently launched global directory features many of the world’s greatest bitcoin-accepting merchants. The directory gives bitcoin users access to thousands of businesses and charities that now accept bitcoin. By continuing to add new merchants daily, BitPay continues it mission to expand Bitcoin in the e-payments world.

BitPay Drives Explosive Growth in Bitcoin Commerce

Also sees rapid enrollments in all-inclusive processing plans

ATLANTA -- December 2, 2013 -- BitPay, the world’s leading merchant processor for virtual currencies, announces that in November it processed a record 55,288 bitcoin merchant transactions, representing a 165% increase from October. Strong activity from KNC Miner, Gyft, and Amagi Metals led the increase.

During the Bitcoin Black Friday event on November 29, BitPay processed 6,296 bitcoin transactions in a single day, making it the most popular day in the history of bitcoin commerce. On November 29, more than 6% of all transactions on the bitcoin network were spent on goods and services through BitPay’s platform.

“BitPay’s order volume is the most accurate indicator of the real bitcoin economy, and today that economy is soaring higher as merchants are seeing tremendous value in accepting bitcoin payments,” states Tony Gallippi, BitPay Co-founder and CEO. “We are building the most powerful, reliable, and scalable tools for businesses to accept bitcoin.”

Last year, the Bitcoin Friday event was BitPay’s largest volume day in 2012 and the company processed 99 transactions. The year-over-year growth of BitPay on Black Friday is 6,260%.

BitPay continues to enroll new merchants at a rapid pace, onboarding over 3,000 merchants in November to exceed a total of 14,000 bitcoin-accepting merchants. Shopify’s integration of BitPay into its checkout process now makes BitPay available to 75,000 merchants using the Shopify ecommerce platform.

Enrollment in BitPay’s all-inclusive processing plans is also accelerating. By selecting one of the all-inclusive plans, BitPay merchants can choose the software features they need, and process an unlimited number of transactions with zero transaction fees.

“No merchant service provider riding on the traditional interchange rails can offer all-inclusive pricing because there are three or four middlemen who take a cut of every transaction,” says Gallippi. “Some processors tease merchants with flat-rate pricing, but there are many hidden fees and limitations that make flat-rate offers an illusion.”

Square, which offers a flat-rate credit card processing plan for $275/month, recently announced they would be discontinuing this plan on February 1, 2014, and would charge merchants a 2.75% or 3.5% processing fee on every transaction.

BitPay, in keeping with its mission to build a better e-payments world, has launched a new global bitcoin directory which features many of the world’s greatest bitcoin-accepting merchants. Shoppers looking for everyday goods and services or unique gifts will find a wide variety of places to spend their bitcoins in the bitcoin directory.

“We are often asked where to spend bitcoins and this global directory allows bitcoin merchants around the world to get discovered,” says Tony Gallippi, BitPay Co-founder and CEO. “With this service we will be linking over 5 million bitcoin users with merchants and we will continue adding more merchants.”

The directory gives bitcoin users access to thousands of businesses and charities that now accept bitcoin. Some of the most popular categories include Web and IT Services, Electronics and Precious Metals. BitPay has also included a Travel and Tourism section for bitcoiners looking to plan their next vacation and a search feature that shows them where to spend bitcoins with local merchants.

The Bitcoin economy has now surpassed 2 billion USD and transactions sizes between USD and BTC continue to rise. Just this morning, lead Bitcoin payment processing company, BitPay, announced the processing of the largest Bitcoin merchant transaction ever of 1 million USD. BitPay not only set a record, but also processed, cleared and settled this transaction next business day for Butterfly Labs. BitPay, unlike PayPal, the lead USD payment processing company, guarantees no reversibility or chargeback of payment.

BitPay issued the following press release:

BitPay Processes $1 Million Bitcoin Merchant Transaction

Processes, Clears, and Settles to Merchant’s Bank the Next Business Day

ATLANTA — October 29, 2013 — BitPay, the world’s largest payment processor for virtual currencies, announces that it has processed its largest bitcoin merchant transaction ever, a single order for $1,000,000 for Kansas City-based bitcoin mining hardware manufacturer Butterfly Labs. BitPay processed, cleared, and settled the transaction within their normal one business day time frame directly to Butterfly Labs’ bank account.

“The speed, reliability, and certainty of payments over the bitcoin network is expanding at a rapid pace, and in many regards has already surpassed the functionality of our 60-year old credit card networks,” states Tony Gallippi, co-founder and CEO of BitPay. “Butterfly Labs can now ship this merchandise with confidence that there will be no reversibility or chargeback of the payment, which is a significant risk found when accepting credit cards online or PayPal.”

Butterfly Labs sells bitcoin mining hardware, which is part of the distributed computing network that secures the bitcoin accounting ledger. The amount of computing power of the bitcoin network has grown exponentially this year, from 20 Terahashes per second (Th/s) on January 1, 2013, to 3000 Terahashes per second today. The network took 4.5 years to reach 1000 Th/s, then one month to reach 2000 Th/s, then and week to reach 3000 Th/s.

BitPay has also expanded the translations of its checkout process into 40 languages, with new additions including French, Chinese, and Portuguese. Customers making a bitcoin purchase with BitPay can now view and complete the entire checkout process in their native language. Business selling electronics, jewelry, and computers can now increase their exports to emerging markets as these items tend to be the most often purchased internationally.

For businesses reaching international customers, accepting bitcoin through BitPay offers a tremendous value. The business can accept a payment from customers in any country on earth, with no risk of fraud or chargebacks, which makes it ideal for businesses selling high-priced items online.

CEO Tony Gallippi will be speaking on Bitcoin’s Place in the Global Financial Market at Webit Congress November 6th in Istanbul, Turkey.

About BitPay

BitPay is a Payment Service Provider (PSP) specializing in eCommerce, B2B, and enterprise solutions for virtual currencies. Visit https://bitpay.com.

ATLANTA -- September 16, 2013 -- BitPay Inc, the world leader in business solutions for virtual currencies, announces it has over 10,000 approved merchants in 164 countries using its service to accept bitcoin payments. This milestone was reached almost exactly one year after the company approved its 1,000th merchant.

The merchants in BitPay’s directory are diverse internationally, with approximately 50% located in North America, 25% in Europe, and 25% in the rest of the world. eCommerce merchants account for over 90% of the business, including consumer electronics, precious metals and IT services. Bitcoin lowers the risk and cost of accepting payments in a card not-present situation, such as eCommerce.

BitPay’s merchant service continues to expand its feature set at a rapid pace. Merchants using the popular Quickbooks small business accounting software can now download and import their BitPay sales into Quickbooks.

“Our merchants are thrilled with this ability to import into Quickbooks,” says BitPay CFO Bryan Krohn. “It makes reporting their bitcoin sales just as frictionless as the payment itself.”

The month of August was another record month for BitPay, processing over 10,000 merchant transactions worth over $6.4 million. Year-to-date in 2013, over $34 million worth of Bitcoins have been spent on goods and services through merchants using BitPay’s platform.

BitPay’s story is unique in the start-up space. Founded by two graduates of Georgia Tech, the company built a working product, acquired customers, and achieved profitability with only the two founders.

After raising their round of seed capital, BitPay has chosen to establish their roots in Atlanta and build their company culture in a city known for innovation, but often overlooked by the Silicon Valley insiders.

“Atlanta is a hub for financial technology, especially in the payment and merchant acquiring space,” states BitPay CEO Anthony Gallippi. “There’s a cluster of amazing companies here, focused on delivering real results through innovation.”

With pre-built plugins or embedded solutions for 20 of the most popular shopping cart platforms, adding bitcoin as a payment option to a merchant’s web store can be done in a few minutes, without any programming code.

About BitPay BitPay is a Payment Service Provider (PSP) specializing in eCommerce, B2B, and enterprise solutions for virtual currencies. Visit https://bitpay.com.

In Quickbooks, you do not need multi-currency enabled if your home currency is USD, EUR, or CAD, and you are taking 100% settlement from BitPay in that same home currency.

First, create 3 new Accounts in your Chart of Accounts. Income and Expense accounts can only be denominated in your home currency. (if your home currency is not USD, replace USD below with your home currency)

Type

Income

Account Name

BitPay Sales USD

Tax-line Mapping

Income: Gross Receipts or Sales

Type

Expense

Account Name

BitPay Fees USD

Tax-line Mapping

COGS: Other Costs

Type

Bank

Account Name

BitPay AR USD

Tax-line Mapping

B/S Assets: Accts Rec

Your Bank Account should already be in Quickbooks. BitPay’s ACH/EFT transfer will be transferred to “My Bank” which you can change in the General Ledger transaction after import. Your Quickbooks Chart of Accounts should have these entries:

If this imports and My Bank USD shows a balance of $100.00 then the file has imported correctly. Look at the G/L to verify the Sales Receipts.

Edit the transfer and replace “My Bank USD” with the Bank account in your chart of accounts that received the direct deposit from BitPay.

Your BitPay sales are now fully integrated with your financial reports in Quickbooks!

Note that if you keep any % of your sales in Bitcoin, this will not be noted in the download. It will prorate the gross sale to only the % of the gross sale which you settle in your local currency. Read the next section “Keeping Partial or All Settlement in Bitcoin” to learn more.

Income Statement derived from BitPay import

Balance Sheet derived from BitPay import

To download your BitPay transactions, login to your merchant account at https://bitpay.com. From your dashboard, click on Account Ledger and select your home currency to download.

You will need to specify the date range to download, and then choose Quickbooks IIF file.

We should note that Quickbooks does not support multi-currency very well, even in the 2013 edition. Nonetheless, we have used the capabilities of Quickbooks to their current maximum potential.

If you take 100% settlement from BitPay in your home currency, you are done!

If you keep a % of your BitPay Sales in Bitcoin, follow the next section to import those from your BitPay BTC ledger.

Keeping Partial or All Settlement in Bitcoin

The Gross, Net, and Fees are % prorated from the total amount of the sale. Meaning if you keep 10% bitcoin and settle 90% in EUR, your EUR ledger will have an entry representing 90% of the total gross sale, and your BTC ledger will have an entry representing 10% of the total gross sale, with the same Order Number so you can match them up in Quickbooks.

Create 2 more accounts in your Quickbooks Chart of Accounts:

Type

Bank

Account Name

BitPay AR BTCUSD

Tax-line Mapping

B/S Assets: Accts Rec

Type

Bank

Account Name

My Wallet BTCUSD

Tax-line Mapping

B/S Assets: Cash

These accounts represent the USD value of your Bitcoins, at BitPay and also when pushed to your Bitcoin Wallet.

How to Reconcile your Company’s Bitcoin holdings in Quickbooks

While Intuit’s support for multi-currency doesn’t give all the income/expense reporting needed for bitcoin transactions, it is possible to add your Bitcoin Wallet into Quickbooks, and mark your digital assets to market price every day or every month.

As of the 2013 edition, Quickbooks cannot:

have an income account in any currency other than your home currency

have an expense account in any currency other than your home currency

allow you to set your home currency to a currency you add (e.g. Bitcoin)

resolve any currency balance to more than 2 decimal place precision

allow you to specify an exchange rate for each sale

allow you to specify a data source for exchange rates for a currency

allow you to upload a history of exchange rates for a currency

allow an exchange rate with a date & time (only 1 rate per calendar day permitted)

We encourage Quickbooks users to contact Intuit directly and encourage development in the above 8 areas to improve their multicurrency support.

You cannot enter Income or Expenses in BTC, mBTC. But you can setup a Bank account in bitcoin to declare and value your bitcoin holdings. You will first need to enable multicurrency support in your Quickbooks. Then, you can add a new currency:

Company - Manage Currency - Currency (New)

Name

millibitcoin (mBTC)

Symbol

mBTC

Next, create a new account in your chart of accounts for each bitcoin wallet you want to account for in Quickbooks.

Type

Bank

Account Name

My Wallet mBTC

Currency

millibitcoin (mBTC)

Tax-line Mapping

B/S Assets: Cash

Because Quickbooks precision cannot go past 2 decimal places for the quantity, if you want to account for your bitcoin holdings you will need to use millibitcoins (mBTC). The exchange rate for mBTC is the rate for BTC divided by 1,000. Quickbooks does have 8 decimal precision when calculating the rate, but only 2 decimal precision on the quantity.

USD for 1 bitcoin (BTC)

$ 123.4567

USD for 1 millilbitcoin (mBTC)

$0.1234567

To transfer the balance from the USD representation of your bitcoin wallet to the mBTC account for your bitcoin wallet:

Every day, you will manually need to enter the exchange rate under Company - Manage Currency. The exchange rate is the USD amount pushed to My Wallet BTCUSD divided by the actual number of Bitcoins delivered to your wallet, as viewed directly on your BitPay BTC account ledger page.

Then, manually enter a TRANSFER every day to clear out the deposit from the My Wallet BTCUSD and transfer into My Wallet mBTC. Your Wallet should now show the latest deposit in the correct number of mBTC, and on your balance sheet the entire wallet balance will be marked to the current market price.

On July 1, Nesenoff & Miltenberg LLP took the step to provide the option for payment in Bitcoin. The Bitcoin currency is not a new concept to this Manhattan based full-service commercial law firm as Nesenoff & Miltenberg LLP, otherwise known as “N&M”, provides legal services for Bitcoin related businesses. N&M finally made the significant step of providing clients an opportunity to pay for services with Bitcoin through BitPay Inc, the lead Bitcoin payment processing company.

Marco A. Santori, Senior N&M Associate, stated: “Manhattan law firm Nesenoff & Miltenberg, LLP, is committed to providing legal counsel to businesses in the growing virtual currency space. As one of the few firms with hands on experience counseling Bitcoin clients in this evolving area, the firm will be accepting payment in Bitcoin, providing those qualified clients with the flexibility and confidence to meet their business needs.”

Bitcoin Magazine had an opportunity to speak with Marco and find out more about his involvement in the Bitcoin community. Over two years ago Marco formed a currency trading fund for a few entrepreneurs. On the side, the clients used to joke and state regarding the currency trading fund, “what they are really doing is trading Bitcoins.” Well, soon Marco found that his ratio of non-Bitcoin related businesses to Bitcoin related businesses was diminishing. Today almost all of his time is spent counseling Bitcoin related businesses. Marco represents clients in NYC and from clients all over the world: BTC Global, companies in Canada, a company in TX, companies in NYC. What used to be a comical afterthought is now a reality for Marco.

Marco has now assumed the role of a “Bitcoin lawyer”. How did he get to a position to assume such a role? Marco took the time on his own volition to learn more about the Bitcoin currency and research on Bitcoin forums and also personally get involved in Bitcoin through serving as Chairman of the Bitcoin Foundation’s Regulator Affairs Committee. After having digital currency clients continue to ask if they could pay in Bitcoin, N&M finally chose to accept Bitcoin as a payment for legal services. BitPay Inc made accepting the Bitcoin currency possible for N&M.

Bitcoin Magazine had the opportunity to interview Marco to learn more of how this process unfolded:

Bitcoin Magazine : When did you first hear about and get involved in the Bitcoin currency?

Marco A. Santori: Nesenoff & Miltenberg, LLP has an established practice counseling clients in the finance and high-technology industries. In early 2011, the firm formed a foreign currency trading fund for a group of very savvy clients. The fund traded mostly Euros and US Dollars, but even back then, they would discuss how the real money would be made in trading Bitcoins. It turns out they were right.

BM: How did you first get involved in the Bitcoin currency? What makes your legal services stand out in comparison to other lawyers assisting individuals in the Bitcoin community?

MS: I have always been a technology enthusiast. I think it has mapped well onto my practice counseling businesses in the tech sector. I don’t actually remember when I purchased my first Bitcoin, but I’ve since fallen pretty deeply into the crypto-currency rabbit hole. I’m fairly certain I’ve read every bit of press coverage on digital currency published since then. I attend regular Bitcoin NYC Meetup groups dedicated specifically to Bitcoin entrepreneurship. I’ve engaged in in-depth statutory analysis, regulatory projections, and simple speculation on web forums. The firm’s clients get the benefit of that knowledge without having to pay someone to reinvent the wheel. I think that clients appreciate it when they don’t have to spend their first chunk of billable time explaining to their lawyer what the block chain is, and why an M-of-N transaction might be the solution to their regulatory concerns. That’s the kind of information the lawyer ought to be providing to the client, not the other way around.

BM: When did you first get the idea to work with clients involved in Bitcoin?

MS: As it goes with most things in the practice of law, I didn’t choose Bitcoin; Bitcoin chose me. Companies first began reaching out to me with their digital currency issues in response to my work with businesses in the tech sector. As that progressed, I was named Chairman of the Bitcoin Foundation’s Regulatory Affairs Committee. Word of mouth is a powerful thing, and I think clients prefer to use attorneys with an intimate knowledge of their industry.

BM: How did you make the decision to accept payment from clients in Bitcoin?

MS: The firm strives to serve its clients. That means flexibility with time – picking up the phone at midnight – and flexibility with money – accepting alternative currencies. It should come as no surprise that clients whose business is dealing in digital currency might prefer to pay their legal fees in digital currency. Paying in Bitcoin presents qualified clients with the flexibility and confidence to meet their cash flow and tax planning goals.

BM: Were there any preexisting law firms and/or businesses that inspired you to get involved in the Bitcoin currency?

MS: The inspiration to get involved with Bitcoin came, as many things in this industry come, from our clients. Bitcoin adoption is the fundamental driving force of their business models. Combine this with the fact that many clients in the space already possess substantial Bitcoin holdings, and it just makes good business sense for them to pay in Bitcoin.

BM: Where do you see your Law Firm’s involvement with Bitcoin going in a year?

MS: Digital currency law is the copyright law of the 2010s. As most lawyers recall, the revolution in computer applications and mp3 encoding resulted in an unprecedented explosion in the volume and quality of copyright law in the late 1990s and 2000s. Likewise, I anticipate substantial growth in the volume and quality of digital currency law in the coming years. Nesenoff & Miltenberg is committed to positioning itself as the law firm of choice for guidance in the digital currency space.

BM: What are your suggestions for individuals hoping to get involved with Bitcoin?

MS: As to early-stage businesses: Talk to a lawyer early on, and then run the numbers. Then run them again. Then run them again, and only then sink money and time into developing your product. That is the correct order of operation for the digital currency business. I spend hours a day speaking to entrepreneurs who have already developed a spectacularly functional and well-polished product, only to realize the cost of IP licensing and regulatory compliance means reworking key features of their business model. As to individuals: support Bitcoin businesses!

BM: If I am an individual involved in the Bitcoin community and need legal assistance, how can I get in touch with your law firm?

MS: You can visit our website at www.nmllplaw.com, and you can email me at This email address is being protected from spambots. You need JavaScript enabled to view it. for more information.

Bitcoin Magazine applauds N&M’s work in the Bitcoin community and additionally this next step to accept payment for legal services with the Bitcoin currency. N&M partners have blazed the trail for legal professionals and businesses to follow and learn more about the Bitcoin currency and other alternative currencies on the rise and path to prominence.

Primecoin has come far in the last few days. Less than a day after founder Sunny King released the genesis block and I first covered the currency, Primecoin has become one of the few alternative cryptocurrencies to be featured on Business Insider, its thread on Bitcointalk has reached 77 pages and has attracted the interest of thousands of people around the world. Now, after two days in the wild, Primecoin is already bringing us real-world value.

Buying primecoins has already become easy; Coins-e, a cryptocoin exchange featuring over 30 currencies, added Primecoin support yesterday. Users need only create an account, deposit bitcoins, and within one hour they will be able to exchange them for primecoins at a current rate of 1 for 0.005 BTC. And if you want to spend them, there’s a business that accepts those too: Satoshi Roulette. SatoshiRoulette is a Bitcoin gambling site that popped up a few months after the industry was first popularized by Erik Voorhees’ SatoshiDice, featuring a roulette game that you can play simply by going to the site, clicking on the guess you want to make (either a number, like 15 or 23, or special options like “FIRST 12″, “EVEN” or “3rd line”) and sending money to the Bitcoin address. As far as infrastructure is concerned, there is now a Primecoin block explorer, which can theoretically be used by web developers to easily set up a Primecoin-accepting store.

However, that is not even the most interesting aspect of Primecoin’s development. Rather, what deserves the most mention of all is that Primecoin miners have already broken world records for finding Cunningham chains. The specific record is for Cunningham chains of length 9; the longest three chains before this week had origins 111, 109 and 94 digits respectively, and had been discovered in 2004 and 2009. The two new records generated this week are 131 and 158 digits respectively. The numbers:

Note that these numbers are obviously not prime; the convention of Cunningham and bi-twin chains (or at least the convention adopted by Sunny King) is that the “origin” of a chain is defined as either one less or one more than the first prime in the chain. This is done for convenience. If one wanted to retrieve some particular prime in the chain from the first prime, one would need to repeatedly multiply by two and subtract one at each step; using this convention, the formula is simply pn = w*2n-1, where n is the index of the prime and w is the origin. For Cunningham chains of the first kind, the formula would be pn = w*2n+1. Thus, the first prime in the smaller record-breaking chain is:

A list of records is being maintained by Dirk Augustin; the miners of blocks 2044 and 5355 have the option of proving who they are (eg. by sending a pre-specified quantity of primecoins from that address) in order to get their names on the list. Length-9 Cunningham chains of the first kind will be much harder to break records for; the current record is already 185 digits long. Cunningham chains of length 10, however, will be easy; the current records are 99 and 109 digits long, respectively. Ultimately however, the Primecoin communities should set their sights on a much more audacious goal: the first advance in mathematics made for the sake of Primecoin mining. In a few years, or perhaps even sooner, we may well get there.

The Bitcoin community and user base continues to expand and businesses old and new are embracing this new digital, decentralized cryptocurrency to simplify the payment process and meet consumer needs. The quantity and variety of businesses accepting payment in Bitcoin continues to expand. From real estate sites to now watch factories, Bitcoin has been embraced to simplify payment and incentivize merchants to sell products and in turn deal with fewer transaction fees.

Just this week, Russia’s historical watch factory Raketa, began accepting Bitcoins. Raketa was founded in 1721 by Peter the Great and is the oldest factory in Russia. For almost 300 years, Raketa, formerly known as Petrodvorets Watch Factory, has produced and sold wristwatches to individuals in Russian and those around the world. Petrodvorets Watch Factory was renamed Raketa in 1961 to honor the World’s first cosmonaut Yuri Gagarin. Yuri was the first human to travel to outer space.

This is a significant step in the right direction for the Bitcoin community. Over the years Raketa’s watches have been produced for the members of the Red Army, Soviet Navy, North Pole expeditions and civilians. Not only is Raketa respected by Russian leadership, but also popular with the public having an array of watch designs from practical to fashionable. Raketa even has the last remaining watchmaking school and operates this training program in conjunction with the Saint Petersberg Technical Institute. Raketa is just not another watch brand or shop, but has deep roots within Russia and a global reach. We can expect Raketa’s step to embrace the Bitcoin currency as a catalyst for other businesses in Russian and around the world to transact in Bitcoin.

Raketa produces all mechanical movements in-house, setting this watch factory apart. Raketa is now unique in an even more significant way in that it currently stands as the only watch factory to date accepting Bitcoins for payment. Factory Director, Jacques von Polier stated, “It is very easy to accept Bitcoins…you just put a logo on your site saying- we accept bitcoins- and that’s it. It is as simple as saying we accept cash!” Manufacturers and merchants can heed Von Polier’s example of taking an easy step and in the long run a very beneficial step of accepting Bitcoins.Bitcoin Magazine encourages businesses to follow suite and accept this alternative payment method which not only alleviates merchant woes, but also makes payment much more convenient for customers. Check out Raketa’s watch selection and feel free to look into making a purchase in Bitcoin today.

One of the disadvantages of Bitcoin that its proponents often gloss over is the fact that its mining algorithm has little real-world value. The underlying issue is this: in order to add a new block to the Bitcoin blockchain, a Bitcoin miner must include a “proof of work”, a number which has a property that is hard to find numbers that satisfy, but is efficient to verify. Essentially, a proof of work is a way of proving to the world that the miner spent a certain amount of computational effort generating the block, and is in fact a vital component of Bitcoin’s security – without proof of work, an attacker could easily pretend to be a million Bitcoin nodes at the same time, and in that way seriously compromise Bitcoin’s transaction ordering mechanisms. The canonical attack, the so-called “double spending” fraud, involves sending a payment to a merchant, later sending the same coins back to yourself and then creating a false consensus that the second transaction happened first, thereby depriving the merchant of their money. Proof of work solves the problem by making “pretending to be a million Bitcoin nodes” prohibitively expensive. However, what makes people uncomfortable is that in Bitcoin’s case the work (SHA256 computations) has no underlying value; rather, Bitcoin’s proof of work is literally nothing more than burning electricity for its own sake.

It has always been thought that we could do better. Many newbies to Bitcoin immediately suggest that the mining algorithm should have involved SETI@home or folding@home, so that the computations would also help bring humanity closer to curing protein misfolding diseases or finding aliens. The problem is, however, that Bitcoin mining requires one key property that SHA256 does have but SETI@home and folding@home do not: it is efficiently verifiable. Right now, all participants in the SETI and folding networks are volunteers, meaning that they (probably) have no intentions other than the desire to actually help the project’s underlying goal. If these networks become tied to Bitcoin mining, however, participants will be motivated by profit, so there would be an overwhelming incentive for miners not to bother with the actual computations and instead provide fake data that has no value to the networks’ underlying goals but is indistinguishable from a genuine computational output.

Primecoin is the first proof-of-work based cryptocurrency that has come up with any kind of workable solution. The central premise of Primecoin is that, instead of useless SHA256 hashes, the proof of work protocol would require miners to find long chains of prime numbers. There are three specific types of chains that are of interest: Cunningham chains of the first kind, Cunningham chains of the second kind, and “bi-twin” chains. The rule behind a Cunningham chain of the first kind is that each prime in the chain must be one less than twice the previous. The first Cunningham chain of length 5, for example, consists of the following six primes:

1531, 3061, 6121, 12241, 24481

In Cunningham chains of the second kind, each prime must be one more than twice the previous. Here, the first length-5 chain appears much sooner:

2, 5, 11, 23, 47

Finally, bi-twin chains are chains of pairs of twin primes, or primes that are 2 units apart from each other, with the average of each pair being twice the average of the previous pair. Each bi-twin chain must obviously have even length; the first chain six primes long is:

211049, 211051, 422099, 422101, 844199, 844201

Note that a bi-twin chain is essentially a Cunningham chain of the first kind and a Cunningham chain of the second kind rolled into one; the first numbers of each pair follow the recurrence that each one is one more than twice the previous (211049 * 2 + 1 = 422099, etc), and the second numbers of each pair are similarly one less than twice the previous.

What is the practical utility of finding primes? Well, if the effort that we put into the topic today for its own sake is any indication, there is definitely at least something to it. The Electronic Frontier Foundation is offering $550,000 worth of prizes to the first groups to discover a prime number more than 1 million, 10 million, 100 million and 1 billion digits long. The first two awards have already been claimed. The Great Internet Mersenne Prime Search has been looking for large prime numbers since 1996, and mathematicians in universities around the world are involved. The University of Tennessee at Martin provides a list of reasons why looking for primes is useful; aside from “for the glory!”, searching for primes leads to useful byproducts in other areas of number theory, provides an incentive for computational hardware development and leads to insights in the underlying workings of prime numbers themselves; the prime number theorem, for example, a theorem stating with high precision how often prime numbers are likely to occur at a given size, was first conjectured by looking at the distribution of actual prime numbers. Here, the hope is that if Primecoin takes off people will start looking for much more efficient ways of finding Cunningham and bi-twin chains, potentially leading to mathematical breakthroughs in how these chains work.

Further Refinements

In order to be a viable cryptocurrency, Primecoin needs a way to finely tune the difficulty of the proof of work; otherwise, new developments in technology or increased popularity may lead to new blocks being created too quickly for the blockchain to be stable or so slowly that transactions take hours to confirm. By themselves, prime chains do not provide enough granularity; a chain eight primes long may be a hundred times harder to find than a chain seven primes long. One option is to reward length, but that would make verification more difficult. The solution that Primecoin settled for is one based on the Fermat test. The Fermat test is a quick way of telling if a number is (very probably) a prime: raise any number (typically 2) to the power of a prime, subtract out the prime as many times as possible and see if you get the original number back. For example:

217 – 17 * 7710 = 2223 – 23 * 364722 = 2

But:

221 – 21 * 99864 = 8

An alternative, and slightly better, formulation is to raise the number to the power of the prime minus one and see if you get one; this being true clearly implies the number passing the other test, and the other direction holds most of the time (one exception is that 3560 = 375 but 3561 = 3 (561 is not prime), but these become extremely rare as primes get bigger). Primecoin uses the p-1 test in combination with the Euler-Lagrange-Lifchitz test, which uses similar principles, to establish primality. So, the question is, how can one use this test to create granularity? That is, how can one distinguish between a chain 7.2 primes long and a chain 7.5 primes long? The answer is simple: look at the resulting value of the Fermat test of the first value in the chain not to be a prime; the lower it is, the larger the “fractional length”. For example, our chain of 2, 5, 11, 23, 47 has the next value 95, 294 modulo 95 (modulo being the mathematical term for the process of repeated subtraction used above) is 54, so the chain would have a length of 5 + (95 – 54) / 95 ~= 5.43. However, the chain 1531…24481 has the next value 48961 with a relatively low Fermat remainder of 1024, so the length would be 5 + (48961 – 1024) / 48961 ~= 5.97. In order for a prime chain to count as a valid proof of work, it must have a fractional length at least equal to the difficulty; as of the time of this writing, this parameter is floating around 7.1.

Since we do not want proofs of work to be reusable, Primecoin also adds another restriction. For the purposes of Primecoin, the “origin” of a bi-twin chain is defined as the average of the first pair, and for single Cunningham chains the origin is what the average of the first pair would be if the Cunningham chain’s twin also existed; for example, the origins of the two single Cunningham chains given above are 1530 and 3, respectively. The restriction is that the origin of a prime chain must be divisible by the hash of the block that the proof of work is for. Hash functions have the property that the only way to look for a value that has a particular hash is the computationally infeasible strategy of simply trying new values until you get a result that works; thus, the only way to generate valid proofs of work is to look for prime chains targeted to one block of which you already know the hash, and these chains would only ever be useful for that specific block.

Primecoin also adds a number of other innovations on the side:

Smooth difficulty adjustment – unlike Bitcoin, which adjusts its difficulty to exactly match the target rate of 1 block per 10 minutes every 2016 blocks (roughly two weeks), Primecoin adjusts its difficulty slightly every block, nudging it toward the target rate in an exponential decay pattern. For example, if network hash power (or rather, prime generation power) suddenly doubles, the next block would be 0.02% harder than the previous, increasing the amount of work required per block to 186.5% of the original after one week and 198.2% after two weeks, assuming no further mining power increases take place.Very fast confirmations – unlike Bitcoin, where transactions take an average of ten minutes to confirm (eight minutes in practice since the difficulty must constantly catch up to increasing mining power), Primecoin blocks come at a rate of one per minute. This allows secure transactions to be made much more quickly; six confirmations may take fifty minutes in Bitcoin, but they take only six minutes in Primecoin. The underlying mathematics behind why six confirmations is a fairly safe threshold is independent of block confirmation time, so the Primecoin transaction at six confirmations is no less secure (it can be argued that attackers can make double-spending attempts ten times more frequently, but going up to just seven or eight confirmations more than makes up for this). Self-adjusting block reward – Bitcoin is known for its controlled currency supply algorithm, which guarantees that only 21 million Bitcoins will ever be generated, as well as specifying the rate at which these Bitcoins will come out. Primecoin follows a different path. The number of Primecoins (XPM) released per block is always equal to 999 divided by the square of the difficulty, a formula which should converge to some maximum if the difficulty increases linearly. Given that Moore’s Law states that computing power increases exponentially, and the effort it takes to find a prime chain is exponential in its length, that is quite likely to hold true.

There are some places where Primecoin missed some serious opportunities for improvement. First of all, the self-adjusting block reward was intended to be a “more natural simulation of gold’s scarcity”. However, in practice it does the exact opposite. The desirable property that gold has is that its supply at least somewhat increases with its value; if the gold price shoots past $5,000, mining opportunities will become profitable that were not profitable before, increasing the rate at which new gold is mined and eventually making the supply go up, partially counteracting the price shock. Here, if the price goes up by a factor of ten, the difficulty will shoot up significantly as well as more miners move in, leading to… a reduction in the Primecoin generation rate. Thus, instead of adding the negative feedback mechanism inherent in gold, Primecoin instead creates a positive feedback mechanism that exacerbates the problem of volatility. Also, Primecoin could have set up its exponential adjustment algorithm to have a much longer period – reaching 86.5% adjustment after two months, for example, instead of a week. This is one innovation that would also at least somewhat stabilize the value of the currency by generating more coins when interest goes up, but unfortunately so far no currency has tried this; Primecoin, despite all of its other improvements, missed the chance to be the first.

All in all, Primecoin presents itself as an extremely interesting experiment; for the first time, we have a currency whose mining algorithm has a secondary value, and at the same time Primecoin, unlike so many other coins before it, actually makes serious attempts to improve on Bitcoin in unrelated aspects. Not taking into account Bitcoin’s massive headstart, Primecoin may well be the first alternative coin to actually be better than Bitcoin, giving the currency the potential for a bright future ahead.

BitPay, Inc announced it’s newest merchant, Gyft. Gyft, a mobile gift card platform, added support for Bitcoin purchases of gift cards on the Android platform, through its partnership with BitPay, Inc, the world’s leading payment processor for Bitcoin. Gyft offers a mobile gift card app to allow customers to buy, store, send, and redeem gift cards on their phones. In addition to a free phone app, customers can share gift cards via Facebook.

Gyft works with 50,000 physical retail locations across the USA including GAP, Lowes, Sephora, Gamestop, American Eagle, Sports Authority, Nike, Marriott, Burger King, Fandango, Brookstone, and many more. Gyft fits right into the Bitcoin community of ingenuity and convenience as the Gyft phone app eliminates a need for plastic gift cards. Gyft’s platform allows for individuals to use the gift cards in online and in person transactions as the app contains front and back copies of a gift card with a bar code to be scanned at the time of purchase.

Gyft provides new opportunities, not only for consumers but also companies selling gift cards. The use of Bitcoin opens the door for Gyft to expand its user base and also contribute to the Bitcoin community by increasing the utility of Bitcoin.

“The partnership with Gyft and BitPay blows the doors open to major retail for Bitcoin users,” said Tony Gallippi, co-founder and CEO of BitPay. “Any shopper in a participating retail store, with Bitcoins on their Android device, can easily convert Bitcoins into a store gift card and pay for their purchase. The whole process takes less than one minute and can be done on a single mobile device.”

“Gyft is proud to be a pioneer in the Bitcoin universe and we are excited about the possibilities for further innovation on our platform,” said Vinny Lingham, Gyft co-founder and CEO. “By using our existing network of retailers, we are able to offer Bitcoin consumers the ability to instantly spend their Bitcoins at hundreds of merchants.”

Gyft made a wise choice in not only getting involved with the Bitcoin currency but also partnering with BitPay. BitPay currently processes $5M per month in Bitcoin transactions for merchants and is taking on new merchants daily to expand the utility of Bitcoin. BitPay now has over 6,000 merchants and Gyft is a stellar addition to the team! Gyft’s partnership with BitPay and acceptance of Bitcoin for giftcard payments is yet another step in the right direction for the Bitcoin currency.